Freeformers and the long tail in financial services

Reading about Richard Duvall, co-founder of Egg and Zopa, I realized there can be a connection between the concept of freeformers and the long tail in on-line financial services.

In the early 2000’s Duvall led New Barn Studios, a team of former colleagues and friends that gathered in his barn to discuss emerging trends and how they impacted society. One of the trends discussed was the freeformers (coined by ethnographic researcher Bruce Davis), a group of people between 30 and 50 who want more control and freedom to do things their own way. They reject (or sometimes are forced to reject) the security of a job for life to pursue more diverse lives that give them more satisfaction and an opportunity to follow their passions.

Information technology is behind this change in attitudes and behaviors. Trust based community sites (e.g. eBay, Wikipedia, Zopa, Q&A sites, among others) gather freeformers and allow them to connect and contribute. In the same way that on-line book, music, and movie sellers/renters overcome the space limitation of brick and mortar retailers and extract value from the long tail, on-line trust based communities overcome geographical barriers and can too extract value from the long tail of users that are not served by established businesses.

Take the example of on-line financial intermediation. Borrowers and lenders connect on-line to provide financial products that are customized to each borrower/lender needs and not designed to meet the mass markets segments as defined by traditional banks. This business model also follows the three rules described by C. Anderson. 1) Make everything available: on-line financial services sites can connect everyone that reaches them, 2) Cut the price in half. Now lower it: on-line financial services don’t have much overhead and can offer a lower cost, 3) help me find it: on-line financial services match lenders and borrowers and help lenders diversify their risk.

The long tail concept applied beyond the entertainment industry can be an interesting way to think about unmet customer needs and come up with a product/service to satisfy them.

Why aren't FACEBOOK adspace prices higher??

Let me qualify what I am going to say by clarifying it is opinion based on my sentiments on Facebook and not on research.

Right now any ads run on Facebook are both underpriced with comparison to other advertising inventory online, as well as relatively ineffective. Why?

To me it seems that Facebook faces a conundrum. To keep the main area of their pages "pure" with the social utility of the posting and messaging, they must make Ad space minimal. SO as long as Facebook is as popular as it is, it seems that Ad space will continue to be minimal. BUT if Facebook becomes less popular, either due to novel competition or burnout, then they have space on their pages that could sell like Gold to the LONG TAIL of the remaining users of Facebook.

So either Facebook sells out some of its most loyal users and puts ADs more centrally located in the pages, and makes more money that way, or membership remains extremely high due to new functions and relatively low ads.

Thoughts?

The Long Tail and Crowd Finance

I've been doing some research into the power of crowd finance and have come across some cool ways in which people who are geographically separated can come together to finance projects that otherwise might be funded by traditional means or not at all.

An example is http://www.myfootballclub.co.uk/, through which investors put up £35 and get a share in Ebbsfleet Football Club: "own the club, pick the team". Also http://www.slicethepie.com/ which lets fans vote on and finance the creation of albums by unsigned music artists. Or how about http://www.projectnvohk.com/, "an eco-clothing company managed by the people who wear it" which is seeking 5,000+ people to contribute $50 and become a decision maker in the company.

I'm looking into putting a similar structure in place for a theatre production in England and would love to discuss this with anyone from the class who is interested in the arts. Any thoughts?

Scripps, the Long Tail, and Wall Street Love

AdAge has an interesting article discussing how old media company Scripps, which started in newspapers, has become the 16th most visited online property. Seeing the possibilities of the Long Tail is one main reason:

Scripps was also ahead of Wired Editor Chris Anderson's Long Tail theory, recognizing that it could slice its food, garden and home programming to appeal to niche audiences. But most importantly, Scripps encouraged a culture that was not afraid to embrace new media that were likely to cannibalize the lucrative properties it already owned.

Also important, however, seems to be a company culture that has for decades embraced new distribution:

Scripps early on embraced a multimedia approach, buying radio stations in the '30s, TV stations in the '40s and '50s, and cable systems in the '80s before becoming a cable programmer in the '90s. Today, Scripps' newspaper division represents just a fraction of the company's total revenue.